Other Businesses?

[MarillionFan]

The very word 'Warchest' implies something for longer-term provision, not a few months' cash you keep to hand.

Indeed but when the OP is only in to second contract the few months cash is a must in the current climate.

According to my calculations my 'warchest' will now last 14 years on an invested burn down, which on a contracting life of 14 years is Ok I suppose.

But it still means I need to work.

Interesting though that for every year I contract, I effectively save a 'year'.

[Waldorf]

There was something in the autumn statement about being able to invest in small companies and getting 50% tax relief, not sure if your company can do this though, might be worth a pop, as in effect you would only be risking half your money.

Tried to google it but couldn't find anything - Sure more details will come out soon.

[TheFaQQer]

Risk adverse poppycock.

averse

[oliverson]

According to my calculations my 'warchest' will now last 14 years on an invested burn down, which on a contracting life of 14 years is Ok I suppose.

But it still means I need to work.

Interesting though that for every year I contract, I effectively save a 'year'.

I like your style MarillionFan. I'm also of the view that contracting isn't the be all and end all. The satisfaction of working on other business ideas is far greater than contracting. But as you say, it's relatively easy money.

I also agree with NorthernLad in that you should aim to have a warchest, something I never did regrettably. It's purpose would be to ride any benchtime and also to allow you time to work on those other business ideas. It's very difficult after a long day, combined with commute, to spend the couple of hours you have remaining in the evening on other businesses. Gets harder as you get older too!

[ChimpMaster]

According to my calculations my 'warchest' will now last 14 years on an invested burn down, which on a contracting life of 14 years is Ok I suppose.

But it still means I need to work.

Interesting though that for every year I contract, I effectively save a 'year'.

If you can invest that money wisely, you won't ever have to worry about a warchest because you would have income coming in to ride you through bench times.

I don't know what your burn rate is, but mine is around £2,000 a month - this covers everything for my family (incl. kids), i.e. insurances, phones, cars, food, bills, going out etc etc. I'm not sure what you mean by 'invested burn rate' but based on my burn rate and using your 14 year figure, I'd need £336k in my warchest to last that long.

As an alternative, an example would be to use that to buy property generating ~£20k a year at 6% yield. So you have an investment bringing in money pretty much forever (with associated hassle and cost of course...).

[d000hg]

Interesting though that for every year I contract, I effectively save a 'year'.

Same here; maybe it's a good rule of thumb to add to the list...

[MarillionFan]

If you can invest that money wisely, you won't ever have to worry about a warchest because you would have income coming in to ride you through bench times.

I don't know what your burn rate is, but mine is around £2,000 a month - this covers everything for my family (incl. kids), i.e. insurances, phones, cars, food, bills, going out etc etc. I'm not sure what you mean by 'invested burn rate' but based on my burn rate and using your 14 year figure, I'd need £336k in my warchest to last that long.

As an alternative, an example would be to use that to buy property generating ~£20k a year at 6% yield. So you have an investment bringing in money pretty much forever (with associated hassle and cost of course...).

£336k invested 'ie 5%' return a year against 24k a year spend would take you 25 years to burn down to zero (inflation ignored). My yearly spend would be 40k. I'm just up to generating half of that a year as passive income which means I still need to contract/work. But another 5 years or so and then it's feet up time(or something else).

[yasockie]

If you can invest that money wisely, you won't ever have to worry about a warchest because you would have income coming in to ride you through bench times.

I don't know what your burn rate is, but mine is around £2,000 a month - this covers everything for my family (incl. kids), i.e. insurances, phones, cars, food, bills, going out etc etc. I'm not sure what you mean by 'invested burn rate' but based on my burn rate and using your 14 year figure, I'd need £336k in my warchest to last that long.

As an alternative, an example would be to use that to buy property generating ~£20k a year at 6% yield. So you have an investment bringing in money pretty much forever (with associated hassle and cost of course...).

Sounds a bit too cautious - surely if you were out of work for 10 years, you would have trimmed your expenses, also the odds that neither you, your partner, nor the kids (in 14 years time, they'll be big enough, I guess?) will be able to find work is enough of a doomsday that it doesn't make sense to keep fiat money for that...

[ChimpMaster]

£336k invested 'ie 5%' return a year against 24k a year spend would take you 25 years to burn down to zero (inflation ignored). My yearly spend would be 40k. I'm just up to generating half of that a year as passive income which means I still need to contract/work. But another 5 years or so and then it's feet up time(or something else).

MF, OK finally I think I get what you mean by 'invested burn down'. The reason I didn't understand before is because I view the investment in a different way. I see the lump sum investment as being a principal sum which is not spent and does not depreciate i.e. it is invested in income-generating assets - property being a simple example.

Let's take an example where you buy a house for £200k (let's assuming outright cash purchase for simplicity), and it brings you £10k a year rental income. That income is yours for life (assumptions & costs aside). When you die of natural causes at a ripe old age, having lived a full and wonderful life, you would have received £10k a year all those years, and still have owned the £200k house (which is very likely worth somewhat more by then). You then bequeath the asset (house) to your kids, for whom it generates £10k a year income, unless of course they sell it to go on multiple 5-star holidays.

So my point being - your £200k investment would never be burned down to zero.

[DieScum]

I do stock market investing. Which has cost me an eye watering sum over the last few years. Could have had a lot of coke and hookers for that... but I think it is swings and roundabouts.

I have been dabbling at creating and selling advertising on websites. Made a massive 10 pounds on adsense this month. Then I sold a 6 month advert direct for 80 quid.

So hardly the big money but who knows where it will go. Was a buzz to generate and sign off the deal for 80 quid. It's not a lot but I made it happen out of nothing.

It's a slightly weird situation for me. As a tight arse I don't need much money to live but I need a lot to reliably generate that as a passive income without having to work. Just need one thing to drop. Maybe it will be a share romping in or maybe it will be one of my stupid schemes actually coming off.